JAPAN Trends and Developments Contributed by: Satoshi Inoue, Yuki Kohmaru, Hikaru Naganuma and Masahiro Yamamoto, Anderson Mori & Tomotsune
Market Overview Year in review
• 121 leveraged buyouts involving leveraged financing of JPY1,634 billion in 2022; • 126 leveraged buyouts involving leveraged financing of JPY3,220 billion in 2023; and • 178 leveraged buyouts involving leveraged financing of JPY2,900 billion in 2024. Additionally, some of these buyouts were fol - lowed by refinancing or recapitalisation after the closing. Notable market trends Upon closer examination, the data reveal four primary trends. • The number of mega deals remains relatively high, as a result of which the deal value of leveraged buyouts for each of the years between 2018 to 2023 was generally higher compared to preceding years. • There has been a decline in the number of mid-sized deals, but this was accompanied by a disproportionate rise in small-sized deals in 2024, meaning that both the number of leveraged buyouts and their aggregate deal value were higher compared to many of the preceding years. • There has been a gradual increase in the number of mezzanine financing in each of the years between 2018 and 2024, compared to preceding years while the number of corpo- rate carve outs, on the other hand, has been gradually stabilising. • The total number of leveraged buyouts reached a record high in 2024. The Japanese market has also seen a growing number of privatisations by way of tender offers. Some of these transactions have been initiated by PE funds, which tend to look at potential enterprise values as opposed to current share prices. In some other cases, tender offers were
The leveraged buyout market in Japan has remained active. The continuing trend is dives- titures or carve outs by Japanese conglomerates of their assets or non-core businesses to global and domestic private equity (PE) funds and other third parties. These transactions take a number of forms, including the sale of shares in subsidi- aries (both private and public) that operate such non-core businesses or otherwise. Although the global pandemic resulted in a temporary slow- down in M&A activities in 2022, the market has made a robust recovery to its pre-pandemic levels in various indicators, led by foreign inves- tors and listed companies with a relatively low- interest rate environment in 2024. Additionally, in 2023, there were a record num- ber of management-led “going-private” trans - actions, which included Japan’s largest-ever management buyout of Taisho Pharmaceutical Holdings. Although the COVID-19 pandemic resulted in a temporary slowdown in M&A activ- ities in 2022 globally, the market has made a robust recovery to its pre-pandemic levels in various indicators, led by foreign investors and listed companies with a relatively low interest rate environment in 2023. According to a research report published by Japan Buyout Research Institute Corporation, there were: • 69 leveraged buyouts involving leveraged financing of JPY978 billion in 2018; • 82 leveraged buyouts involving leveraged financing of JPY750 billion in 2019; • 92 leveraged buyouts involving leveraged financing of JPY845 billion in 2020; • 108 leveraged buyouts involving leveraged financing of JPY1,160 billion in 2021;
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